Q3 2021 Credit Newsletter: A League of Their Own: Why Are Private Debt Firms Lacking in Diversity and Failing to Measure Up to Demands?
Earlier this year, Jensen Partners published the first installment in a series of data-driven articles analyzing systemic challenges in diversity recruiting within the credit space. We wrote about how private debt managers are under immense pressure to recruit and hire a more diverse and inclusive workforce as diversity, equity, and inclusion (DEI) rose up the agenda of private market LPs and GPs.
In a sign of just how important DEI has become to the success of any investment business, the Institutional Limited Partners Association (ILPA), a group that includes more than 550 institutional investors representing over $2 trillion of private equity assets under management (AUM), recently revised its due diligence questionnaire (DDQ) and diversity metrics template by adding 12 questions to the DEI section of the due diligence forms. According to ILPA, the updated version features more globally relevant designations for race and ethnicity, as well as more inclusive information on gender/diversity such as the addition of a nonbinary designation. ILPA also encourages LPs to ask GPs questions about their willingness to implement DEI policies, the presence of a code of conduct that covers harassment, discrimination, and violence in the workplace, and the implementation of policies designed to recruit and retain staff from underrepresented groups. Thanks to the efforts of ILPA and other industry associations, it's clear that DEI is moving from a nice-to-have to a must-have for investment management firms. (FYI, ILPA’s Due Diligence Questionnaire is open for a public comment period through September 24, 2021.)
Lack of Female and Black and Hispanic/Latinx Representation
In the first part of our DEI series, Jensen Partners looked at 1,860 investment credit professionals—categorized according to their ethnicity, gender, and seniority—working at the top 20 private debt firms that collectively managed $3.5 trillion in assets. We found a significant lack of representation of Black and Hispanic/Latinx professionals among investment credit professionals, both in junior and senior roles. In this second part of the series, we analyzed the 253 investment credit professionals working at 50 private debt firms, representing $557.6 billion in total leveraged loan AUM. We found a similar trend in the diversity of investment credit committee professionals, which were predominantly male and Caucasian. (See the two charts below.)


Here are additional key takeaways from our analysis of the 253 investment credit committee professionals:
- Caucasians make up the vast majority (83.40%) of investment credit committee professionals. The only three ethnic minorities with decent representation relative to the population are South Asian (4.26%), Middle Eastern (2.98%), and East Asian (2.13%). There is little representation among Black (0.43%) and Hispanic/Latinx (1.28%) professionals. This is similar to the results from our earlier DEI analysis, where representation among Black and Hispanic/Latinx professionals was 0.5% and 1.2% respectively, suggesting a lack of improvement in addressing the systemic challenges of diversity recruitment and retention.
- In terms of gender, we found that women represent only 7.11% (or 18 of 253 professionals), which is an unusually low number given that women generally make up 40-50% of marketing professionals across the alternative investment industry. Of the 18 women, the majority (83.33%) identify as Caucasian, whereas 11.11% identify as East Asian. There weren’t any female investment credit committee professionals who identified as Black, Hispanic, Middle Eastern, or South Asian. In our previous DEI analysis, women represented 16.1% (or 299) of investment credit professionals, within which only 4.35% identified as women of color.
- In terms of region, our data shows that North America is leading the way, representing 82.28% of all hires, followed by the UK (13.78%) and the rest of Europe (3.94%). Based on our analysis, there weren’t any hires in the APAC region.
Adressing the Diversity Issues in the Private Debt Industry
While the entire alternative investment industry is still grappling with how to respond to demands for progress on DEI, it is clear that the private debt industry is in a league of its own. Our analysis shows that private debt firms (as a whole) are less diverse than other types of alts firms. There could be a number of reasons for this disparity. The likeliest reason is that credit firms operate in niche financial markets that are comparatively even more insular than the hedge fund or private equity industries, for example. This makes it harder for diverse talent to break into the credit industry, while the few that do break in face additional obstacles in trying to move up the ranks.
Recent efforts by ILPA and other industry associations to put DEI on the agenda for all fund managers have cast a scathing spotlight on the parts of the alternative investment universe that are slowest to change. Credit firms that want to stand out for the right reasons should consider taking the following steps:
- Collect data on the diversity of the organization, with specific metrics on race, gender and ethnicity at a minimum
- Appoint a point person to help lead and integrate DEI efforts across the organization, ideally someone who is already a part of senior leadership
- Interview current and former employees to better understand the opportunities and challenges the firm faces in recruiting and retaining a diverse workforce
- Measure and report on any DEI progress to both LPs and employees to ensure a measure of accountability
- Participate in industry-wide initiatives aimed at increasing the diversity of the financial industry (e.g., launching mentorship programs or doing campus recruiting outside of the usual targets)
We will continue conducting these types of analyses and sharing our insights as part of our mission to help make the alternative investment universe more diverse and inclusive. We look forward to reporting on our progress and sharing additional insights in future newsletters.
Sincerely,
Sasha Jensen, CEO & Founder
News Articles on Credit + Diversity
Here is a selection of recent articles about diversity in the private and structured credit space:
CityWire Selector: Women in finance still underrepresented in senior roles, study shows
Financial Investment News: Institutional Investors See Some Progress In Journey To Address DEI
FundFire: CFA Institute Proposes Code for Diversity, Equity and Inclusion
FundFire: Wealth, Asset Mgmt Leaders Overestimate Firm Diversity Performance: Report
New Private Markets: DEI in private markets: the state of play
New Private Markets: LPs step up the pressure for GPs to make real progress in diversity
Pensions & Investments: Women still underrepresented in institutional management
Pensions & Investments: Investors press companies on DEI
Pensions & Investments: Money managers get serious on DEI efforts
Pensions & Investments: Preqin: Alts industry showing some progress on gender equality
Pensions & Investments: Diversity Equity and Inclusion Debunking the Myths
Pensions & Investments: CFA Institute finds DEI measures taking hold
Private Debt Investor: Investors turn the diversity spotlight on debt
Private Debt Investor: Gender Equality: Five ways private funds are making progress
About Our DiversityMetrics™ Platform
Since 2014, Jensen Partners has tracked more than 25,000 marketing and investment moves across the alternative investment industry, which gives the firm the depth and breadth of data necessary to find the best talent and make the best recommendations. Jensen Partners has also recently invested heavily in its data capabilities by bringing in expert resources to optimize the firm's market mapping model and identify new opportunities for its clients.
In 2017, Jensen Partners began tracking the diversity of marketing talent to better meet the demand for diverse hires, and in 2021 the firm began tracking the movement of marketers specializing in ESG and impact investing. Jensen Partners makes these data and insights about trends in the alternative investment industry available exclusively in its newsletters.
Our Awards
We are thrilled to add another award to our collection, this time thanks to the readers of Private Equity Wire who named Jensen Partners the "Best Recruitment Company for Investor Relations & Asset Raising" for the second year in a row in their 2021 European Awards. We look forward to continuing to work with alternative investment firms in Europe and around the world, with a renewed focus on helping those firms make measurable and demonstrable progress on their diversity, equity and inclusion efforts.


Jensen Partners is a women-owned global advisory, corporate development and executive search firm specializing in the placement of leading investment and capital-raising candidates for the alternative asset management community. The firm leverages a data-driven approach to all human capital management, combining quantitative and qualitative information to source and place the best candidates for each specific role. Using the firm’s proprietary DiversityMetrics™ platform, Jensen Partners has built a database with verified demographic data (e.g., race, gender, seniority, age, education, etc.) on more than 25,000 investment and distribution professionals, providing asset managers with the breadth and depth of information necessary to quantify, measure, report and improve workforce diversity, equity and inclusion (DEI). In addition to executive search, Jensen Partners also offers LP/GP referencing, proprietary 360° Investor Referencing™, and compensation benchmarking and analysis.
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